Lira Weakens 1st Day in 4 as Greek Elections Relief Short-Lived

June 18 (Bloomberg) -- The lira fell for the first time in
four days, reversing earlier gains, as record-high Spanish bond
yields reflected concern the euro zone’s debt crisis may not be
contained in Greece.

The Turkish currency weakened 0.3 percent to 1.8174 per
dollar at 4:05 p.m. in Istanbul, heading for the biggest
depreciation in almost a week. The decline pared the lira’s gain
this year to 4 percent, the third-best among more than 20
emerging-market currencies tracked by Bloomberg after Colombia’s
peso and Hungary’s forint.

Greek poll winner Antonis Samaras’s New Democracy party and
the Pasok party won enough seats yesterday to control the 300-member parliament if they were to join forces in a coalition
government, easing concern Greece would be forced out of the 17-member currency bloc. The lira gained as much as 0.6 percent to
1.8073 in early trading today.

“At least we avoided the catastrophic tail-risk
scenario,” Benoit Anne, the head of emerging-markets strategy
at Societe Generale SA in London, said in an e-mailed note to
clients. “But it looks like that in itself has not been enough
to provide a sustained boost to risk sentiment. These days in
Europe, it is all about bond yields.”

Spanish 10-year bond yields rose above 7 percent for the
first time since the euro’s creation today as a jump in bad
loans fueled concern Europe’s debt crisis is deepening. Italy’s
10-year yield climbed for the first time in three days, up 14
basis points to 6.06 percent.

Yields on Turkey’s two-year benchmark bonds were unchanged
at 9.11 percent after falling as much as 7 basis points in
earlier trading.

Turkey’s stock market also gave up gains recorded in the
morning session, declining 0.2 percent and heading for its first
loss in 12 days, ending the longest streak of gains since 1993.